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IE604 System Dynamics Modeling & Analysis Introduction Jayendran Venkateswaran IEOR, IIT Bombay A systems perspective Reactive Low Events and Decisions Leverage Adaptive Patterns of Behavior Generative High System Structure

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Introduction

Jayendran Venkateswaran

IEOR, IIT Bombay IE604 System Dynamics Modeling & Analysis

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IEOR, IIT Bombay Jayendran Venkateswaran

A systems perspective

Events and Decisions Patterns of Behavior System Structure

Source: Lecture notes on An Introduction to System Dynamics by George Richardson, University of Albany

High Leverage Low Leverage Reactive Adaptive Generative

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IEOR, IIT Bombay Jayendran Venkateswaran

How have we been ‘solving’ problems?

p Open Loop Thinking p Event oriented view of solving problems

Problem Goal Situation Decision Result

Identify Problem Gather Data Evaluate Alternatives Select Solution Implement

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IEOR, IIT Bombay Jayendran Venkateswaran

Source: Lecture notes on Introduction to System Dynamics by John Sterman, MIT

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IEOR, IIT Bombay Jayendran Venkateswaran

Source: Lecture notes on Introduction to System Dynamics by John Sterman, MIT

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IEOR, IIT Bombay Jayendran Venkateswaran

Source: Lecture notes on Introduction to System Dynamics by John Sterman, MIT

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IEOR, IIT Bombay Jayendran Venkateswaran

Why does this happen?

p Short term focus p Delays p Feedback p Unintended consequences p Unanticipated consequences

n “Not my fault!”

p Counter-intuitive behavior p Policy resistance

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IEOR, IIT Bombay Jayendran Venkateswaran

Systems thinking

p Give a man a fish and you feed him for a

day; teach a man to fish and you feed him for a lifetime

n A popular Chinese proverb

p Is this adequate?

Source: Systems Thinking, Bowman et al., Oxfam (2015)

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IEOR, IIT Bombay Jayendran Venkateswaran

Moving towards a systems view

Goals Decisions State of the System "Side" Effect Goal of Other Agents Action of Others More "Side" Effects

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IEOR, IIT Bombay Jayendran Venkateswaran

Moving towards a systems view

Goals Decisions State of the System "Side" Effect Goal of Other Agents Action of Others More "Side" Effects

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IEOR, IIT Bombay Jayendran Venkateswaran

Moving towards a systems view

Goals Decisions State of the System "Side" Effect Goal of Other Agents Action of Others More "Side" Effects

SLIDE 12

IEOR, IIT Bombay Jayendran Venkateswaran

Moving towards a systems view

Goals Decisions State of the System "Side" Effect Goal of Other Agents Action of Others More "Side" Effects

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IEOR, IIT Bombay Jayendran Venkateswaran

Moving towards a systems view

Goals Decisions State of the System "Side" Effect Goal of Other Agents Action of Others More "Side" Effects

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IEOR, IIT Bombay Jayendran Venkateswaran

How do we do Systems Thinking?

p Dynamics thinking (graphs over time) p Causal thinking (feedback loops) p Stock-and-Flow thinking (accumulations) p Thinking endogenously (system as cause)

These characterize System Dynamics Approach

Source: Lecture notes on An Introduction to System Dynamics by George Richardson, University of Albany

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IEOR, IIT Bombay Jayendran Venkateswaran

India’s car production (2008-2018)

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IEOR, IIT Bombay Jayendran Venkateswaran

Example causal loop diagram

Birth Rate Rat Population Death Rate + +

Population Density Area Infant Mortality +

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IEOR, IIT Bombay Jayendran Venkateswaran

Stock-Flow model of Epidemics

Susceptible population (S) Infectious population (I) Infection Rate (IR) Contact Rate (c) Total Population (N) Infectivity (i) Recovered Population (R) Recovery Rate (RR) Average duration

f infectivity (d)

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IEOR, IIT Bombay Jayendran Venkateswaran

System Dynamics Methodology

p System Dynamics Methodology is modeling

technique to frame, understand, and discuss complex issues and problems.

n Focus on behavior of the system n System boundaries and variables n Inter-relation between variables n Learn from the model development process n Identify and use measurable variables n Iterative model development process

p Build, study, simulate, observe, learn and improve

System

Dynamics Methodology

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IEOR, IIT Bombay Jayendran Venkateswaran

What we are going to do in this course

p Learn System Dynamics methodology

n Causal Loop Diagram n Stock Flow diagram

p To elicit mental models of business, social,

economic and environmental systems

n Expand mental models by explicitly accounting

for feedback and delays

p Test and improve model using computer

simulation

p Analyze the model and simulation results

correctly

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IEOR, IIT Bombay Jayendran Venkateswaran

Textbook and references

p John Sterman, Business Dynamics: Systems

Thinking and Modeling for a Complex World, Irwin/McGraw-Hill (2000).

p Craig W. Kirkwood, System Dynamics: A

Quick Introduction, Arizona State University (1998) [ Available online at: http://www.public.asu.edu/~kirkwood/sysdy n/SDIntro/SDIntro.htm ]

p Others reading material as provided/

indicated in class

p Computer Usage: Vensim, Python, R

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IEOR, IIT Bombay Jayendran Venkateswaran

Course Assessment (TBD)

p Exams p Quizzes p Assignments p Project/ Presentation p Others p Audit students must have sufficient

performance to obtain a CC & should maintain sufficient attendance

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IEOR, IIT Bombay Jayendran Venkateswaran

Points to Note

p It is assumed that you are intelligent, capable and

willing to learn.

n Ask question any time during the lectures

p Do attend the lectures

n You may find it useful n Instructor (me!) will be happy to see a full class n You may actually learn something

p Be on time p Moodle used for announcements & interactions. p Lectures (M 10:35 – 11:30, T 11:35-12:30, Th: 8:30-9:25)

n On Tuesdays we may go up to 1pm n On Thursdays we may start a little early, say 8:15am (esp.

for tests)

n I will announce any such updates in advance.